Module 30: Prop Firms
Key Takeaways
- Prop firms fund traders with company capital for a profit split.
- You usually pass an evaluation with profit targets and loss limits.
- Risk rules are strict — discipline matters more than big wins.
What are prop firms
Proprietary (“prop”) trading firms give skilled traders access to the firm’s capital. You trade their money and keep a share of the profits (often 70–90%), while the firm absorbs the losses within set limits. This lets a disciplined trader control larger size than their personal capital allows.
FTMO
One of the best-known firms. You buy an evaluation (“Challenge”), hit a profit target while respecting daily and overall loss limits, and on success receive a funded account with a profit split.
FundedNext
A popular alternative with various evaluation models, sometimes including profit-share during the challenge phase. Models and rules vary, so read the terms carefully.
Evaluation process
Typically: reach a profit target (e.g. 8–10%) within or without a time limit, never breach the maximum daily loss or maximum overall drawdown, and follow any consistency rules. Pass and you’re funded; breach a rule and the evaluation fails.
Evaluations cost money and most participants fail — usually from breaking risk rules. Only attempt one after you’re consistently profitable on demo. Research the firm’s reputation and payout history first.
Frequently Asked Questions
Reputable ones are, but the industry has poor actors. Verify payouts, reviews and regulation before paying for a challenge.